Home » 3PL/4PL, Aviation, Customs & Trade, Maritime, Ports/Terminals » PH sees drop in trading across borders indicator in WB doing business report

The Philippines slipped 11 places to 124th out of 190 economies in the latest World Bank (WB) Ease of Doing Business report.

Trading across borders was one of the indicators where the country saw a slip, to 104th from 99th.

The Washington-based lender’s latest report, “Doing Business 2019: Training for Reform,” showed that while the Philippines’ score increased 1.36 to 57.68, its rank slid down to 124th from 113th last year. This is the second year in a row that the country’s rank dropped after it fell 14 places in the 2018 report.

The annual report measures regulatory quality and efficiency based on 10 indicators applied to regulations concerning ease of doing business in the life cycle of a business. These pillars are starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts, and resolving insolvency.

Under the trading across borders indicator, the report noted “The Philippines made trading across borders more difficult by increasing the number of inspections for importing, thereby increasing the average time for border compliance.”

In particular, the time it takes for import border compliance has increased to 120 hours from 72 hours in the previous report. Documentary compliance for imports remains at 96 hours.

For exports, the time it takes for documentary compliance improved to 36 hours from 72 hours in the 2018 report.

Costs, meanwhile, remained the same. For exports, documentary compliance cost remained at US$53 and border compliance cost was at $456. For imports, documentary compliance cost was still $50 and border compliance cost at $580.

Improved ranking

The country improved in ranking for five of the 10 pillars, namely, starting a business (173rd from 166th), dealing with construction permits (94th from 101st), getting electricity (29th from 31st), protecting minority investors (132nd from 146th), and paying taxes (94th from 105th).

It declined on registering property (116th from 114th), getting credit (184th from 142nd), trading across borders (104th from 99th), enforcing contracts (151st from 149th), and resolving insolvency (63rd from 59th).

In terms of scores, the Philippines showed increases in seven out of 10 indicators, namely, starting a business, dealing with construction permits, getting electricity, registering property, protecting minority investors, paying taxes, and protecting minority investors. Meanwhile, it retained its previous scores in enforcing contracts and resolving insolvency, and dropped its score in getting credit.

The top 10 countries in this year’s report were New Zealand, Singapore, Denmark, Hong Kong, South Korea, Georgia, Norway, United States, United Kingdom, and Macedonia.

Doing Business captured a record 314 regulatory reforms between June 2, 2017 and May 1, 2018. Worldwide, 128 economies introduced substantial regulatory improvements, making it easier to do business in all areas measured by Doing Business.

“This year’s results clearly demonstrate government commitment in many economies, large and small, to nurture entrepreneurship and private enterprise,” said Rita Ramalho, senior manager of the WB’s Global Indicators Group, which produced the report.

“In addition, there is a wide range of countries reforming this year—it’s more universal. No one questions that these things are important any more, such as the need for a simple process to start a business.”

Review demanded

The Philippine Department of Finance (DOF) and Department of Trade and Industry  (DTI) are demanding a review of the country’s rating, saying it was “unfortunately, offset by the grossly inaccurate and understated findings in the getting credit indicator” of the report.

In a joint statement, DOF and DTI said the drop in getting credit was “because of the failure of the World Bank’s survey team to gather the correct information on the country’s credit information database.”

“The Philippines should have obtained a higher score if the World Bank included data from all the credit bureaus—the BAP Credit Bureau Inc., TransUnion Information Solutions, Inc., and Microfinance Information Data Sharing Inc. (MIDAS), to name a few.”

Instead, they added, the World Bank obtained its data only from the BAP Credit Bureau Inc, which has the smallest database of 1.7 million borrower-entrepreneurs. “The Philippines could easily have hurdled the 5% coverage if the World Bank selected the largest credit bureau, as its methodology prescribed. The major credit bureaus with high coverage were included in previous year’s survey,” they further said.

“Moreover, it is ironic that the Philippines’ Getting Credit score slumped from 30 points in the 2018 survey to only 5 points in the 2019 survey when credit is growing year-on-year by 19% mostly to micro, small and medium enterprises, the highest among the ASEAN-5,” the statement added.

Both departments said that, moving forward, for the 2020 Doing Business report, the strategy will be two-pronged: continue to pursue regulatory reforms and implement an effective communication campaign.

The DTI and DOF said they will launch, in coordination with other agencies concerned, an aggressive communication campaign in the next three months so that the planned regulatory reforms the agencies have started to implement will be credited in the 2020 Doing Business report cycle.

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